This year France elected a new socialist president, Francois Hollande, who immediately announced his intention to undo whatever Sarkozy and Merkel dreamed up. He also announced an intention to raise taxes on millionaires, as he seeks to cut France’s public deficit to 3 percent of gross domestic product next year from a projected 4.5 percent deficit this year. Mon Dieu! But this sounds somehow somewhat familiar.

Ooops! President Francois Hollande’s 75% tax rate on the rich, France’s top court just ruled is unconstitutional. The tax was a focal point of discontent among entrepreneurs and wealth creators, many of whom have moved to Britain or other more friendly climes. Noted French actor Gerard Depardieu moved across the border to Belgium.

Politically, this has an impact because it was a symbol for French public opinion, and was considered abroad as the emblem of French tax excess, of “French tax hell,” said Dominique Barbet, senior economist at BNP Paribas SA in Paris. “In deficit terms, it’s truly negligible.

The decision could be positive for France’s bond market because it show there is a limit to the government’s ability to raise taxes on the wealthy and may decrease the flight risk of more rich French citizens.

Hollande’s 2013 budget relies on 20 billion euros in additional taxes: 10 billion euros from companies and 10 billion euros from individuals. There were also new taxes on capital gains, an increased tax on wealth, higher inheritance taxes and an exit tax for entrepreneurs who sell their companies. There is also a new 45% tax bracket for incomes exceeding 150,000 euros per year.

The Laffer Curve applies in France as well as here. The taxes would not bring in the amount expected. But the whole thing does sound familiar.

Like this:

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This is, indeed, a positive development, combined with the very public — indeed, defiant — departure of Gerard Depardieu to Belgium, which, ironically, levies high taxes on income as well, though not at 75% and it does not tax wealth.

France needs more than just high-profile entertainers to speak out. It needs more small-scale businesses and younger people to rebel against the economic sclerosis that has crippled what otherwise could be a strong economy. Unfortunately, those that represent the center right (by French terms), like Sarkozy, tend to embrace aristocratic mannerisms — Sarko could be very rude, especially to everyday people he would encounter at public gatherings — and spend too much of their time hanging out with celebrities. And those who represent the far right are essentially national socialists. The libertarian ideal is promoted by just a handful of academics.

Hollande won the election in part because he has a reputation for being a nice, regular guy, he eschews the kind of bling that Sarko surrounded himself with, and he played up the impossible dream that leftist politicians cling to in France.

DSK (Dominique Strauss Khan) understands the kinds of reforms that France needs, and precisely because he was a member of the Socialist Party would have stood a good chance of getting them through Parliament — Nixon goes to China and all that. Unfortunately, he has a serious character flaw that only came to light publicly after he was arrested in New York last year.